Cigar News

When it comes to the cigar industry, there is a line from a John Lennon song that sticks in my head “Nobody told me there would be days like these”. That’s what happened last week when a controversy erupted following a Cigar Aficionado article on Altria’s position on FDA regulation submitted as a part of the recent ANPRM for premium cigars. Altria is the parent company of popular and longtime premium cigar brand, Nat Sherman.

Nat Sherman is a brand that has a long history, and one that has gone through a renaissance over the past seven years. In 2011, Michael Herklots came over from Davidoff to run Retail and Product Development. While Herklots is known for spearheading projects such as the Nat Sherman Timeless, Sterling, and Epoca lines, he also had done some work re-establishing the brand in brick and mortars. At the time that products had saturated the discount catalog chain, he not only helped the brand reconnect with brick and mortar retailers but he helped it reconnect with consumers.

Early in 2017, the family run business of Nat Sherman was acquired by tobacco giant Altria. Nat Sherman was now part of a big corporation. While Altria had played in almost every segment of the tobacco business, the one area it had not dabbled in was handmade premium cigars. In a way, Nat Sherman was something new to this conglomerate.

Altria’s position on tobacco regulation has been well-stated – it favors tobacco regulation. Before the Nat Sherman acquisition, the company documented this position as a part of the 2014 ANPRM. At the time the FDA was seeking comment on regulating all tobacco products.

Fast forward to 2017, while the position on regulation hadn’t changed, Nat Sherman was a strong brand in the premium cigar world. While there were some isolated cases of retailers not wanting to do business with Altria, a heavy amount of Nat Sherman retailers not only remained Nat Sherman retailers, many also signed up to be purveyors.

In July of 2017, new FDA Commissioner Dr. Scott Gottlieb opened the question on regulating premium cigars and whether they should be regulated differently than the one-size-fits-all approach adopted in the past. This resulted in a new ANPRM that dealt specifically with premium cigars. Altria once again submitted comments, this time on behalf of Nat Sherman, which was now one of its operating companies. While the comments were still pro-regulation, Altria did opine that a one-size-fits-all approach should not be adopted and offered concrete recommendations on a better way to proceed.

The headline spread like wildfire across social media channels. There were accusations that Altria was trying to destroy the premium cigar industry. Some called for a boycott, and there were some cases where retailers even were considering removing the product from the shelves. Nat Sherman was particularly upset by the headline, which they believed was misleading. In a letter to customers (see below), Herklots stated, “My peers and colleagues should know that Altria has supported the regulation of all tobacco products even before FDA was given the regulatory authority to do so nearly a decade ago. However, it has been equally clear since then that those regulations do not need to be the same for every tobacco product.”

Dear Friends,

You may have read the recent editorial from Cigar Aficionado, which did not fully reflect the substance of Altria’s recent comments on the Food & Drug Administration’s Advance Notice of Proposed Rulemaking (ANPRM) on the Regulation of Premium Cigars. I wanted to offer my perspective.

Any of you who know me, know that I feel quite fortunate to have made my passion for the premium cigar industry my career for nearly twenty years. This is an industry like none other, with manufacturers, retailers, and consumers who are truly passionate about premium cigars. In 2017, the family business I worked for since 2011, Nat Sherman, was purchased by Altria. This was personally quite a transition, as with any change. And during this time, I’ve been grateful for the unwavering support of our retailers and consumers who’ve continued to enjoy the products I’ve been honored to help develop and sell.

I’ve also appreciated Altria’s thoughtfulness about the premium cigar business and their desire to learn more about and positively contribute to this industry, which extends to our approach to comments on FDA’s ANPRM on premium cigars.

My peers and colleagues should know that Altria has supported the regulation of all tobacco products even before FDA was given the regulatory authority to do so nearly a decade ago. However, it has been equally clear since then that those regulations do not need to be the same for every tobacco product.

The comments clearly articulate that FDA can regulate premium cigars differently and in a simpler and less burdensome way than what was included in the agency’s final deeming rule two years ago, which placed all cigars under its authority:

“FDA may regulate ‘premium’ cigars differently from other cigars, so long as the differences are science- and evidence-based and FDA applies objective criteria to allow for predictable and fair application of its authority… While we believe that all tobacco products should be subject to FDA’s regulatory oversight, we also accept that regulation need not be a one-size-fits-all approach.”

The comments also suggest a simplified process for product modifications, an expansion of the Substantial Equivalence exemption pathway, not imposing harmful or potentially harmful constituents testing requirements on any cigars at this time, and note that FDA must define a “premium” cigar – which is currently not the case.

To remedy that, Altria offered a specific set of criteria to help define precisely what a premium cigar is, which all premium cigar industry colleagues will recognize:

Wrapped in 100 percent whole leaf;

Contains 100 percent tobacco filler;

Contains 100 percent tobacco binder;

Made by hand, except to allow for the use of a manually operated machine to assist in bunching, rolling and binding;

Contains no additives other than cigar glue and water;

Does not contain a filter, tip or non-tobacco mouthpiece; and

Weighs at least six pounds per 1,000 count.

Further, it went on to say, “if FDA pursues differential regulation, it should adopt a definition of ‘premium cigars’ that is objective, allows for uniform application, and does not create loopholes that can be manipulated by manufacturers to avoid regulation.”

Altria also rightly points out that price should not be considered in the criteria for premium cigars, reflecting what all true cigar enthusiasts know, great premium cigars do not need to be expensive to be good, nor to be premium.

It is important to understand that simultaneous to providing comments to FDA, Altria supports, alongside all of the leading cigar industry trade associations, the current Cole-Bishop amendment in Congress, which among other things provides for a premium cigar exemption. In doing both, we uphold the idea that premium cigars are different from other cigars.

I encourage you to read Altria’s comments in their entirety and come to your own informed opinion about the company’s commitment to the premium cigar industry.

Thank you for allowing me the opportunity to share these thoughts with you, and I look forward to seeing you all soon and enjoying a premium cigar together.

To this author, the knee-jerk reaction by the cigar community was not surprising, yet it was perplexing. While both the 2014 and 2018 comments favored a pro-regulation stance, if you look at the 2018 comments, they were much more pointed toward handling premium cigars. Again, while I understand any premium cigar consumer being very upset about a pro-regulation stance, the 2018 comments were more dialed back and had recommendations for handling premium cigars differently than other tobacco products. I also feel the emotional response was amplified by the fact that many customers feel quite connected with Nat Sherman and felt let down.

Despite some outcries from the retail community, the International Premium Cigar and Pipe Retailers Association (IPCPR) made a statement on Friday 8/3/18 on the controversy. The organization stated: “While the association differs with Altria’s official position on premium cigar exemption, we are heartened by the company’s statement that ‘Premium Cigars Are Different’, and further, their subsequent comments that premium cigars are a unique tobacco product category harmed by current FDA regulations. This includes their opposition to the unwarranted pre-market pathway and untenable testing framework under the Deeming Rule. Moreover, Altria has publicly supported current legislative language sponsored by Congressman Cole (R-OK) that includes a premium cigar exemption. We will continue to work with our partners in industry in support of favorable outcomes for premium cigars and pipe tobacco.”

What the next few months will bring will be interesting. What we do know is that prior to the acquisition, the Nat Sherman team spent many years rebuilding its relationship with brick and mortar retailers and consumers. While this may be a herculean challenge in the eyes of many, I’m confident they can get the job done again.

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